MacBook as Media Centre

i just have a few questions and i have searched the forums for my answers and have found some, but i am new to macs and everything still is a little confusing.

I have recently just bought the mini DVI adapter and have my MB hooked up to my 32inch HD LCD via DVI to HDMI. i want to run the macbook as my entertainment centre (watch DVDs, AVI's, listen to music, watch TV etc)

my first problem is sound, the sound currently only comes out of the MB speakers which is a little quiet when i am sat on the other side of the room. i had read somewhere that the macbook gives out optical/digital sound and can be 5.1 via VLC? what would i need to do this? i currently am thinking about purchasing a big surround sound kit and run my MB, xbox etc through it and just have the one sound source.

secondly, i would like to record TV on the mac to playback on my TV (i have a dvd recorder and the quality is pathetic) is there anyway that i could do this?

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